A Guide to the Commercial Building Tax Deduction. Effective: January 1, 2006 to December 31, 2008 HL /07

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1 A Guide to the Commercial Building Tax Deduction Effective: January 1, 2006 to December 31, 2008 HL /07

2 The H.R. 6, Energy Policy Act of 2005 was signed into law on August 8, (Opportunity expires January 1, 2009) The Energy Policy Act of 2005 (EPAct 2005), has enacted an energy-efficient commercial building tax deduction with favorable incentives for the taxpayer, subject to a cap.

3 Since its founding in 1898, Holophane has constantly worked at the technological frontiers of illuminating engineering, seeking new and better solutions to the challenge of producing energy efficient, high performance lighting systems. Holophane s history and value proposition is to offer our customers the lowest total cost of ownership through unique and innovative products. The commercial building tax deduction is yet another incentive to help you get there. Customer Benefits: Improved cash flow Reduced payback period on investment Lower annual operating expenses Reduced energy consumption Increased productivity potential Improved lighting quality

4 2The Commercial Building Tax Deduction Commercial Building Tax Deduction EPAct 2005 provides a tax deduction, limited to an amount up to $1.80/sf for exceeding ASHRAE/IESNA by up to 50%, to the property for which the energy efficient expenditures are made as part of new construction or renovations. Alternate system-specific deductions are available for three building sub-systems each up to $0.60/sf interior lighting; HVAC; building envelope Interior Lighting Tax Deduction: Lighting energy consumption is estimated to represent approximately 1/3 rd of commercial building energy use. As a result, lighting is recognized as a qualified energy savings system that is eligible for a partial tax deduction up to $0.60/sf. Deduction is limited to the capitalized energy efficiency investment for the year in which the energy efficient investment is made The provision is effective for property placed in service after December 31, 2005 and prior to January 1, 2009 This tax deduction is generally given to the individual/ organization that makes the investment (typically the owner). However, for government buildings, the tax deduction may be taken by the designer Deduction can be allocated to design firms for energyefficient commercial building property expenditures made by a public entity, such as public schools, hospitals or government offices Interim Rules for a Lighting Specific Deduction: Outperform the ASHRAE/IESNA energy standard by 25-40%. Eligible tax deduction will be between $0.30-$0.60/sf. Warehouses must outperform the ASHRAE/IESNA energy standard by 50% and qualify only for a $0.60/sf deduction. All control requirements in the Standard must be met; automatic shutoff for buildings greater than 5000 sf and bi-level switching must be installed. All existing building codes and product regulations must be met. Controls Requirements: The controls for new construction must fully comply with the mandatory and perspective requirements of Standard New facilities and renovations must also include bi-level switching. Automatic shutoff required for buildings greater than 5,000 sf. Control systems require one control per 10,000 sf for spaces greater than 10,000 sf, or one control per 2,500 sf for spaces less than 10,000 sf. Tandem wiring is required for 1- and 3- lamp fluorescent luminaires. Bi-level switching is required to provide the option of reducing light output. Bi-level lighting can be achieved with step-level switching, switching luminaires, switching lamps or dimming lamps. Holophane provides a variety of controls solutions including occupancy sensors, dimming controls, step-level dimming and energy-management systems. HOLOPHANE EPAct

5 Energy Standard Power Density (watts / sf) APPLICATION OFFICE Enclosed Open Plan Conference / Meeting Lobby RETAIL Sales Area Dining Food Preparation INDUSTRIAL Manufacturing (high bay) Manufacturing (low bay) Warehouse (bulky storage)* Warehouse (fine storage)* SCHOOLS Classroom Gymnasiums Cafeteria Corridor HEALTHCARE Nurse Station Patient Room Corridor Exam Room ASHRAE/IESN A WATTS / SF % Reduction watts / sf ($0.30 / sf) Not available Not available % Reduction watts / sf ($0.60 / sf) * 0.80* Reference: ASHRE/IESNA Standard Space-by-Space Method Table For whole building power density limits, refer to Table *Warehouses must outperform the standard by a minimum of 50% and qualify only for a $0.60/sf deduction Sliding Scale Interior Lighting Deduction: Deduction based on level of lighting power density reduction below ASHRAE/IESNA standard. For all applications defined in ASHRAE/IESNA , EXCEPT warehouses, the reduction standard must outperform the standard by 25-40% in order to receive the partial deduction. Warehouses must be at least 50% lower than the standard to qualify for the partial deduction of $0.60/sf. Sliding Scale Lighting power density reduction below % 26% 27% 28% 29% 30% 31% 32% 33% 34% 35% 36% 37% 38% 39% 40% Warehouses Applicable tax deduction per square foot $0.30 $0.32 $0.34 $0.36 $0.38 $0.40 $0.42 $0.44 $0.46 $0.48 $0.50 $0.52 $0.54 $0.56 $0.58 $ % $ HOLOPHANE EPAct

6 The Elite Series Industrial Holophane s Elite Series, the next generation of a proven and reliable electronic HID ballast technology, gives you the best possible solution to meet your lighting requirements. Coupled with Holophane s ISD SuperGlass technology there is no competition when it comes to pure performance in terms of light quality, light distribution and energy savings. Prismalume & Prismpack V Prismalume and PrismPack high bay fixtures using pulse start metal halide lamps and ballasts are designed for use in numerous applications to meet today's energy efficient requirements. Powered by a highly efficient magnetic ballast, and superior ISD SuperGlass optics, this product is positioned to put light where you want it and provides you with energy savings during a time of skyrocketing energy costs. 6 HOLOPHANE EPAct

7 IntelliBay and IntelliVue - P.O.L.A.R. Warehouse IntelliVue and IntelliBay high bay fluorescent fixtures feature the Holophane patented P.O.L.A.R. technology that maximizes lumen output when changing ambient temperatures exist. Available with a plethora of finishes and options, the IntelliVue and IntelliBay will give you the style, performance, and energy savings one comes to expect from Holophane products. ISHB Individually Sensored High Bay As part of our standard offering on several HID highbays, Holophane s Individually Sensored High Bay (ISHB) option has its own sensor to maximize both control and energy savings. ISHB detects motion within the sensor range and sends a signal to the luminaire to switch from low light output to normal light output when occupancy is detected. When there is no activity, the control reverts to 50% input power to lower energy consumption. Simply put, ISHB is designed to monitor your lighting system, luminaire by luminaire, and only put energy use where it is needed when it it is needed. 8 HOLOPHANE EPAct

8 Retail The Designer Series Retail, commercial and institutional lighting presents a complex challenge with variable ceiling types and heights often used to define form and function. Holophane s Indoor Designer Series luminaires, such as Illuminaire, PrismGlo, or the highly touted Series, each having their own unique shape, have proven in many successful installations to not only save energy but also improve sales when a stylish and inviting setting is needed. Couple this with the beauty, durability and maintenance ease from glass and these become the luminaires of choice. 10 HOLOPHANE EPAct

9 Institutional Illumibay Conventional high bay luminaires use a ballast housing focused on function only with no consideration given to aesthetics. However Holophane s Illumibay Series introduces an attractive new look to high bay lighting. The Illumibay incorporates the most efficient optical design on the market today (Holophane s patented ISD SuperGlass) with a ballast housing having elegant, contemporary styling. This soft visual transition reduces the contrast and subsequent perception of glare while transforming the fixture from a means of providing light to an actual element of design. Now available with multiple compact fluorescent lamps, this fixture intrinsically integrates bi-level control requirements for EPAct requirements. 12 HOLOPHANE EPAct

10 Manufacturing * New Construction Warehousing * Retrofit Reflectance: 50/30/10 Ambient temperature: 55 C Mounting height: 28 Reflectance: 50/30/10 Ambient temperature: 40 C Mounting height: 28 Example Calculations LUMINAIRE LAMP & BALLAST DATA LUMINAIRE DATA OPERATING DATA Lamp type Number of lamps Ballast type Initial lumens Lamp watts Lamp life (hrs) Lamp lumen depreciation Total system watts Ballast factor Luminaire dirt depreciation Temperature factor Coefficient of utilization Maintained luminaire lumens Number of luminaires** Footcandles Cost per KWH Total installed price *** Size of installation (sf) Lighting power density (watts / sf) Hours of operation/year Annual energy costs Annual energy savings Elite Series HID High Bay 320W Pulse Start 1 Electronic 37, , , $0.08 $164, , ,760 $76,727 $95,060 LUMINAIRE LAMP & BALLAST DATA LUMINAIRE DATA OPERATING DATA Lamp type Number of lamps Ballast type Initial lumens Lamp watts Lamp life (hrs) Lamp lumen depreciation Total system watts Ballast factor Luminaire dirt depreciation Temperature factor Coefficient of utilization Maintained luminaire lumens Number of luminaires** Footcandles Cost per KWH Total installed price *** Size of installation (sf) Lighting power density (watts / sf) Hours of operation/year Annual energy costs Annual energy savings IntelliBay Fluorescent High Bay 54W T5HO 3 Electronic 5, , , $0.08 $145, , ,760 $74,004 $129,508 EPAct SAVINGS ASHRAE requirement (watts / sf) % ASHRAE improvement Tax deduction ($/sf) Corporate tax bracket Deduction Incentive Payback (years) Payback without EPAct % $ % $60, EPAct SAVINGS ASHRAE requirement (watts / sf) % ASHRAE improvement Tax deduction ($/sf) Corporate tax bracket Deduction Incentive Payback (years) Payback without EPAct % $ % $120, * Please consult your local Holophane factory sales representative for proper luminaire, lighting requirements, depreciation factors, and ASHRAE/IESNA guidelines. ** Quantity of luminaires needed to meet required light levels *** Installed price must include bi-level capability * Please consult your local Holophane factory sales representative for proper luminaire, lighting requirements, depreciation factors, and ASHRAE/IESNA guidelines. ** 1-for-1 replacement *** Installed price must include bi-level capability 14

11 Acuity Brands Lighting, Inc. 214 Oakwood Ave., Newark, OH Contact your local Holophane factory sales representative for application assistance, and computer-aided design and cost studies. For information on other Holophane products and systems, call the Inside Sales Service Department at Visit our web site at ww.holophane.com HL / Acuity Brands Lighting, Inc Visit our web site at Printed in USA

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